Consumer Spending

This article talks about how the rate of consumer spending has slowed, while income has risen by 2.6%. Economists also predict that consumer spending will drop this year, due to the increase in taxes (specifically, Social Security). Do you think that this decrease of consumer spending will have a large impact on businesses? What about unemployment?

Jobless Claims Rise

This article in the Wall Street Journal, gives a brief overview of jobless claims within the last month. To date the number of people filing an initial jobless claim is 368,000. Even though this is "the biggest jump since early November," economists still view this as a sign of an improving labor market. Also, within the article, it states that "personal incomes rose 2.6% in December which is the highest increase in eight years." So, will these encouraging numbers continue to grow in the year 2013, or will new tax policies and the fear of the fiscal cliff, substantially hurt confidence and lead to more layoffs and less wages?

Funny Infograph

Given our discussion today about prevailing opinions on the AS curve, I found this picture rather amusing.
Which opinion would this support? What does it say about government regulation? In any case, it made me laugh. So enjoy! (LINK)

Investment in Renewable Energy

In this article, Diane Cardwell focuses on the efforts of renewable energy companies to obtain tax breaks similar to those of fossil fuel companies. Today, renewable energy companies are bringing down the prices of things such as wind turbines and solar panels. A tax break could be the last piece of the puzzle in order for renewable energy to fully compete with fossil fuels. As the articles states however, "the effort (to obtain a tax break) may run aground in the larger tax overhaul that Congress and President Obama are pursuing." So, should the government grant more tax breaks to these renewable energy sources? What effects could this have on the economy?

Consumer confidence and its impact on C and I

Consumer confidence was way down this month:

  from Econoday

Look whats happened to stock prices (equities) related to confidence in recent months (the picture below).  It does seem like something is out of whack.  Of course it could be the influence of monetary policy that is driving stock prices up.  (see here for the source)   

Normally, you'd see both I and C trend downward as consumers get more pessimistic about the future condition of the economy.  But not right now.  

Economic Contraction

This article talks about many of the factors of GDP (investment, exports, etc.) including GDP itself. It also talks about how residential investment increased, along with investment in software and equipment by businesses. The article claims that much of this contraction at the end of 2012 was due to the drop in military spending, which I believe was ridiculously high to begin with. What do you think about this article? Do these increases in investment mean good things for the economy in the future?

Apple Losing Favor?

This article in the Economist talks about Apple possibly being past its prime in the technology world. I personally feel that Apple, innovation wise, has not been especially exciting this year or last. Their software isn't particularly good (think: apple maps). The analysts are setting the expectations for Apple higher than they might be able to achieve. Is the Apple brand finally becoming less important? Do you think that they will finally be beaten out by Samsung and lose favor as their innovations continue to let us down?

Cyclical effects vs. Structural effects

In this blog written by Bruce Bartlett, many of the concepts in class are touched on in some sort of matter. He begins by stating the problem "that economists always have in analyzing the economy is separating cyclical effects, which are temporary, from structural effects, which have long-term implication." So I first pose the question, from what we have learned in class, which effect played a larger role in the 2008 Global financial crisis?
Bartlett also touches on the fact that cyclical and structural unemployment are both problems and that automation is leading to more and more unemployment problems today. With this being said, I am wondering if outsourcing jobs is a larger problem today or automation within our country is a larger problem within the job market? 

Debt Ceiling

This article talks more about the debt ceiling that is a hot topic right now. Republicans have "agreed to postpone this particular piece of the fiscal confrontation, but only until May. The decision to turn the debt ceiling into a confrontation is a big mistake for the Republicans and extending the indecision is likely to prolong the agony of uncertainty and have damaging economic consequences for the country."

I feel like this whole debt ceiling issue is a pressure cooker. Republicans keep putting it off and putting it off, and each time they do this I feel like the problem only gets worse. I think that when they finally face the issue and do something to fix it, the consequences will be more severe than if they had figured this out months ago. What do you guys think?

Online Music Streaming

In this article within the New York Times, the author explains how websites such as Pandora and Spotify are becoming more popular on a global level. However, even though these websites are becoming more popular it seems that artists are making less from royalties when these websites play their songs. The article gives actual data from an up and coming artists which states, "After her songs had been played more than 1.5 million times on Pandora over six months, she earned $1,652.74. On Spotify, 131,000 plays last year netted just $547.71, or an average of 0.42 cent a play." This seems like a very small amount for such a substantial amount of plays. 

In your opinion, who is more entitled to the profits of these websites, artists or the websites. Also, will things such as Pandora and Spotify help to eliminate illegal downloading of music?

Pay Still High

This article talks about several executives at large companies that were bailed out still receive enormous salaries. Personally, I think it's ridiculous and completely wrong for these executives to make so much money while they lay off workers and their company has to be bailed out by the government. What do you guys think of this?

Central Banks Shooting Up Markets

This article by TIME Business & Money discusses issues that Central Banks may be causing.  Like our discussion in class on Thursday, the article says central banks are pumping money into the economy and hoping for the best.  Though they know what these monetary policies will do, it is difficult to tell the extent.  Implantation of monetary policy can cause hyper inflation or spark a recession.  Also, it looks like the United States is not the only country using their Central Bank to control the economy.

Japan's use of their Central Bank is discussed heavily in the article.  How is Japan different from the United States in regards to monetary policy implementation?  What do you believe the FED should do next?

A Look at Global Unemployment

This article from the International Business Times discusses the possibly of global unemployment rising until 2017! I believe it is important to consider global unemployment because through globalization and trade, economic trends are connected throughout the world.  The United Nations labor agency came out with this projection as an update for the world's youth.  The article goes on to present various unemployment statistics throughout the world since the 2008/2009 financial crisis.

The article also highlights the chart shown below.  Check it out and comment on what the next few years look like.  Are you worried about these projections?  Where do you think the global economy is heading in the next few years?  Where are we in the business cycle right now?  It this cyclical or structural unemployment?  

Democracy is at risk.....

We've gerrymandered Congressional districts so that they are safely Republican or Democratic.  No one complained.  So let's get creative and do the same for the electoral college.

 From Virginia state senator Bill Carrico, explaining why rural voters are unhappy with Virginia's current method of simply counting up the votes statewide in presidential elections:

The last election, constituents were concerned that it didn't matter what they did, that more densely populated areas were going to outvote them.

 Okay....that's Virginia.  We live in Michigan.  Never would happen here, would it?

And while we're on the subject, here's a bonus quote from Michigan representative Pete Lund, explaining why his Electoral College vote-rigging scheme is gaining support this year but didn't in 2012:

It got no traction last year. There were people convinced Romney was going to win and this might take (electoral) votes from him.

Quote of the Day: Being Outvoted is Unfair and Demoralizing | Mother Jones

The goal of a macroeconomic system is?

Maximizing social welfare?  What is that?  A little fight over the plight of the middle class took place this week in the blogosphere. One piece of it connected social welfare to life expectancy.  (see here)



Life expectancy in the US has changed dramatically for both men and women. But for some, it has fallen quite a bit.

Oh Politics! House Majority Leader Eric Cantor on Government Spending

Eric Cantor is grilled by a CNN Money reporter at the World Economic Forum.  Here is yet another video created during the Word Economic Forum.  With so many world leaders and economic experts  all in one place talking about the same issues, this Forum seems to recent buzz in economics.

Cantor talks about plans to balance the federal budget in 10 years.  He explains the accounting that goes into these goals in regards to the baseline adjustment. He emphasizes we need to control the budget in order to see long term growth. Politics seem to be the restricting factor in budget cut implementation.

Do you believe austerity is the answer or should we keep spending?  Cantor sees spending as THE PROBLEM and even uses the metaphor of America "digging the hole deeper" by restricting cuts on government expenditure. Where do you fall in this argument?  If spending isn't the enemy, what do you think is?  Everyone can agree that we want to see growth, but how do you believe we can get there?

World Economic Forum in Davos, Switzerland

Monetary policy, liquidity, business cycle analysis, and global economics- its all here!  This video by Bloomberg Special Reports highlights the recent World Economic Forum in Davos.  The video presents a panel with the following notable people: Ignazi Visco Bank of Italy Governor, Anshu Jain Deutche Bank CEO, Pierre Moscovini French Minister of Finance, Brain Moynihan Bank of America CEO, Jin Liqun China Investment Corp Chairman, and Ray Dalio Bridgewater Associates founder & CEO. This group represents the thoughts and prospective of key financial players in global economics.  

The panel is focused on the use and misuse of monetary policy in regards to where we are heading in 2013.  Visco's response in particular is very relevant to our class discussions. He has an interesting comment on central banks needing to find out if the economy is in a cyclical adjustment or structural before implementing monetary policy.  What are your thoughts on Visco's response?  

Watch the rest of the video and notice where the panel respondents differ and agree in their comments.  What is the best take away advice about implementing monetary policy we can get from these respondents?

Hope you enjoyed the interesting video!

Tax Revenue Post Hurricane Sandy

There was an interesting article in the NY Times today talking about a decline in property taxes for those cities and counties hit by Hurricane Sandy. This decline may be delayed but governments are concerned that they will be receiving significantly lower revenue and may have trouble paying for public services like police and schools. This worry is also increased by the fact that financing for rebuilding will also be made more difficult.

This event has got me thinking again about climate change and its macroeconomic effects. If natural disasters continue to occur will governments have to prepare budgets to accommodate for these changes? Just food for thought. Especially in a time where state and local governments are struggling to pay bills. What's everything thinking about these issues?


http://www.nytimes.com/2013/01/25/nyregion/storm-damaged-homes-mean-lower-property-tax-revenues-in-new-york-region.html?_r=0

Congress's next 30 days: get your popcorn and prepare for the show

From politico.com

"Congress’s next battle will be to keep the government open after March 27 while simultaneously stopping massive spending cuts to the Pentagon and other government programs that take hold March 1......But there’s almost no way for both sides to get what they want — setting the nation on a course to a possible government shutdown or deep cuts to government programs that no one wants, unless someone blinks."

Read more: http://www.politico.com/story/2013/01/fiscal-fights-who-will-blink-first-86700.html#ixzz2J0Ev3YGH

The fiscal multiplier at work in Europe

 Remember that the multiplier is essentially a feedback mechanism in the goods market and the flatter the expenditures curve, the larger the multiplier is.  This little piece from the Business Insider talks about the ramifications of a larger than expected multiplier on European GDP.  Sitting here in the US, it seems irrational to me that a country would choose austerity when already in recession.  (see the piece here)

Middle Class Politics

Quiggin gives some historical context for the importance of the middle class in the U.S. and has me thinking more about the political context of tax reform in the last election. The Zombie theory of "Trickle Down Economics" has been debunked but we continue to hear about how taxation for the richest Americans will only stifle economic growth. The Bush Tax Cuts provided a cushion for the those at the top of the wealth period but has also significantly added to our tax deficit due to a lack of revenue during massive military spending increases. Some are defending that the middle class are not actually falling behind and Jim Tankersley takes these claims on in Wonkblog:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/24/yes-the-middle-class-really-is-falling-behind/

Take a look, I would love some feedback on everyday ways we have seen declines in middle class. Tankersley takes on the increasing costs of gas, healthcare and especially education in a refreshing light.

Fiscal Cliff Hangover

As we continue to talk about government spending and deficits, it is important to note that the "fiscal cliff" problem in the U.S. congress has not been resolved but moved until March. Depending on where America is on the Aggregrate supply graph we looked at today may decide whether spending cuts will help/hurt the recessionary trends of the country. Policy Makers in the house are looking at large spending cuts to balance this budget, but is this the best move while our economy is slowing recovering?

This NY Times article will help to update everyone on the details of the extension:
http://www.nytimes.com/2013/01/24/opinion/a-debt-crisis-averted-for-now.html?hp&_r=0

Fall in Jobless Claims

Since we discusses unemployment today, thought I would share this recently published information provided by Bloomberg.  This short video and corresponding article discuss that there is a decrease in this week's jobless claims.  This is great news for the United States economy!  But do these numbers really tell us much? Though the decrease in claims means less people are filing for unemployment insurance, the decrease may be seasonally related. Based on the information you observed today in class, do you think unemployment is still a pressing issue in the United States?  How and to what extend should the Federal Reserve react to our 7.8% unemployment rate?

Chicago Federal Reserve Economic Symposium

Since we have been talking about how the Federal Reserve, I figured this would be great an opportunity to hear from the FED directly.  This link will take you to a page where you can download the Chicago Fed Letter explaining an economic summery of 2012 and forecasts for 2013.  The forecast says there is suppose to be a real GDP growth rate of 2.3% in 2013. It also mentions that the unemployment rate is expected to lower.  Overall the Chicago FED believes we will experience more economic growth than we did in 2012.  Do you agree, or do you believe this forecast is too optimistic?

Check out the chart on the first page of the report and pay attention to the different indexes and economic measures.  Which do you believe is the most accurate and most useful?

The Trouble With Austerity

Laua D' Andrea Tyson talks about the slow GDP growth in our current recession in comparison with recessions of the past in her blog post, "The Trade Off Between Growth and Deficit Reduction." At: 
http://economix.blogs.nytimes.com/2012/12/14/the-trade-off-between-economic-growth-and-deficit-reduction/?gwh=71258D0F6B190AC798B0339D41114F9D

She argues that low government spending on goods and services has severely impacted the slow growth in GDP. She notes the IMF study which Dr. Mckinney directed us to about fiscal multipliers in output and unemployment as well. So why are policy makers so concerned with cutting budgets when spending increases could help bring the economy out of recession? What are the benefits to these cuts? What is the strongest argument for keeping spending down? Does it have to do with actual economic implications or merely political gains?

"Residential investment is still depressed as a result of overbuilding during the 2004-8 housing boom and the tsunami of foreclosures that followed. Large losses in household wealth, deleveraging from excessive debt, weak growth in wages and household income, and a decline in labor’s share of national income to a historic low have combined to constrain consumption growth. Wobbly consumer confidence and the concentration of most income gains at the top of the income distribution have also contributed." 

"Weak investment demand cannot be explained by low profits and high taxes: the profit share of national income has hit a historic peak and taxes on investment income are at historic lows."

"By the same logic, the $600 billion of revenue increases and spending cuts scheduled for next year — the so-called fiscal cliff — would have large negative effects on demand, output and employment and would reduce future potential output as well.The fiscal cliff packs a powerful punch: there will be 3.4 million fewer jobs by the end of 2013 if Congress allows these policies to take effect."

Fiscal multipliers and austerity

The IMF's chief economist and a colleague published a 3 page note in October about mistaken notions about the size of the fiscal multiplier.  They then released a longer paper in early January.  One comment about the this work (which pretty much sums up all the comments) was:

Nothing in economics is more potent than a simple idea whose time has come. Illustrating this maxim, a three-page article in the IMF’s latest World Economic Outlook promises to have a greater effect on global economic policy than all of the interminable meetings held at the annual meetings of the IMF and the World Bank in Tokyo a week ago.  

That article, written by IMF chief economist Olivier Blanchard and Daniel Leigh, presented evidence that the fiscal multiplier [1] in the advanced economies is considerably larger than had been assumed when fiscal austerity plans were set in train in most economies in 2010. The implication, if they are right, is that austerity is much more damging to output in the near term than was anticipated. As a result, the planned fiscal retrenchment could be hard to sustain in the next few years, not only in the eurozone but in the US and UK as well. In fact, we are already seeing signs of this in peripheral Europe and the UK.

(see link here) 

You can find the longer paper here if you are interested. 

Today's Housing Market

Today we learned about spending, investments, and the application of statistical research when implementing policy.  This article by Bloomberg has it all and uses statistical information and earnings to express improvements in the housing market.  Take a look at the survey results section for more information on home sale estimates. Note that both Bloomberg and S&P have different ways of measuring these estimates.

In regards to the bigger picture at hand, the article conveys there is a lack of supply in the existing housing market. Does this mean there will be an increase in building?  Are people hesitant to sell, but at the same time willing to buy because housing prices will only go up?  As stated by Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market."  I believe it is definitely a buyer's market, but am hesitant to say it is a sellers market.  What are your thoughts?  Would you buy a house as an investment if you had the disposable income?   Is the housing market making a comeback? 

Quiggin and Klein on Banking Regulations

So we have been taking on the theme of banking and regulations in this blog and I think that Quiggin also highlights some enlightening news on the risks that banks take when they have a public safety net. Quiggin takes a stance on the volatility that banks create in markets when they have incentives to take more risks.

Take a look at Ezra Klein's article on the status of regulations for the rest of Obama's term:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/21/in-the-next-four-years-well-see-if-wall-street-can-be-reformed/?wprss=rss_ezra-klein


"Such rules are intended, in part, to prevent “Too Big to Fail” from happening again — having firms that are so big and intertwined with the rest of the financial market that the government must step in to bail them out if they’re melting down. But there are already indications that some officials believe that more has to be done to prevent risky bank meltdowns and taxpayer bailouts."

Foreign Policy Challenges for President Obama’s Second Term

With President Obama’s inauguration today it is a good time to think about where the president’s term is heading and what issues should be top priority.  This article provided by Brookings Foreign Policy discusses the strategic steps President Obama should be taking in terms of foreign policy.  The article presents a map of the world and tags high priority locations as “big bet” areas and low priority spots as “black swans.”  What do you guys think about how the areas where tagged? What areas of the world do you believe the United States should be focusing on building connections with?  

Debt-limit deal

I found another article on debt limit in WSJ.

"The debt-ceiling deadline, a point at which the government will run out of money unless lawmakers agree to increase the debt cap, is expected around March 1. Without a deal, there will be disruptions in certain day-to-day government operations and possible delays to bill payments."

The article discusses the potential options for the US and the big players in the decision.  For example, the treasury bill and that it does not seem the US will have to resort to default.  

Republicans Split on Debt-Ceiling

The Wall Street Journal reports on the issues facing the Debt limit of 16.4 trillion dollars. The Treasury is anticipating the ceiling to be hit around 'mid-February to early March.' The article also focuses on the split between the Republicans. 

"The Dwindling Deficit"

My boy Paul Krugman has a refreshing perspective on the urgency of our financial crisis. The overall debt and spending issues have been at the forefront of much of our Macroeconomic problems but Krugman argues, "are we correctly addressing the depressed state of the economy and unemployment?"

Take a read, someone play devil's advocate maybe?

http://www.nytimes.com/2013/01/18/opinion/krugman-the-dwindling-deficit.html?_r=0

Morgan Stanley Sees Profits Rise in 4th Quarter

Morgan Stanley saw profits increase and beat the estimates of analysts because of gains in wealth management and investment banking. Their revenue came in at about 7 billion in the 4th quarter, up 23% from a year ago. With this revenue increase, Morgan Stanley was able to pay its employees more money. As the article states, it could raise some eyebrows on Wall Street. In 2010, compensation was at 62% and it was at 60% in 2012. In 2010, Chief executive James Gorman said that "the rate should be no higher than 50%."

Should this raise some eyebrows on Wall Street? This data seemed to please investors as Morgan Stanley stock went up by 6% ($21.98) in this mornings trade. Or is this a turn around point for Morgan Stanley?

China and the one-child policy

This article is about the potential end of the one-child policy in China.  This policy, originally used as a policy to constrain a growing population size, may now change as the country is experiencing a shrinking group of workers.  

"Mr. Ma's comments come as many Chinese demographers call for an end to the family-planning policy, which was implemented in 1980 to manage a population explosion encouraged by Chairman Mao Zedong. They argue that propping up birth restrictions threatens the country's labor force, which has been the backbone of its economic growth in recent decades."

From this article, I agree and feel like changing the policy may be best now for their economy.  I would not have said so during 1980 when this policy was implemented.  However, as the article states, "Demographers have known for years that China's population decline could threaten its economy."  From what you all know about population control and China, do you see how this change in policy may be best for their economy?  Or, is a change in this policy potentially more detrimental?

Europe Brightens

To continue on the topic of Europe and the euro from today's class...

This article supports what my group said in class this morning, "Evidence is piling up that European financial markets think the euro zone's debt crisis is fading—the euro rose to near a 10-month high Thursday—but feeble economic activity suggests the crisis is only in remission."  Additionally, the article supports our data findings that Germany is expected to have growth while the overall euro-zone economy remains behind.  Countries such as Spain, Italy, and Portugal are "steadily curbing their reliance on foreign borrowing to support their economies."  From this, what can be said about their national savings identities and which part of the identity is affected?

Investors are slowly returning to the eurozone.  Personally, I would not invest here, as there does not seem to be nearly enough "good" going on for me to safely invest.  However, without such investments or hiring in the economy, an economic recovery is out of reach.  What are your thoughts on these countries in Europe and is there anything more you noticed about any of the country's national savings identities that wasn't already mentioned in class?  What from this article proves to you that the eurozone is worthy to invest in? If you were an investor, would you?

A sign of good things to come?

The Financial Times reported that jobless claims reached a low that has not been attained in over 5 years. The article, which can be found here, describes the overall housing market as a major cause of this. The current housing market has been a great boost to the U.S. economy at a time when the fiscal cliff debate is dominating the news.

Economic Data Lift Stocks

Economic data today was able to lift stock today as unemployment benefits dropped to an all-time low while housing surged. This is great news and hopefully it continues to grow and prosper. But in the end its just data. This article from the New York Times basically just talks about what stocks went up and the few that went down. A futures analyst said "“It’s great news and it should take the markets higher."

How much can you buy into this data let alone trust any markets in the United States at this point in time? In my opinion, everything is uncertain as to what is going to happen in the future because of the volatility of the markets here in the United States. 

The future of China as World's factory

So interesting things are happening in China. This article talks about how China is loosing its edge as companies seem to be relocating to other Asian countries. The article says, "The shift—illustrated in weakened foreign investment in China—has pluses and minuses for an economy key to global growth." What are some of the pluses and minuses can you think of for both China and the neighboring countries?

Gun Control

In light of recent events, this sad topic interests a lot of us and impacts us all.  This article from the NYT  about gun control laws states, "some of the proposals that Mr. Obama is expected to make at the White House on Wednesday, which are likely to include a call for expanded background checks, a ban on assault weapons and limits on high-capacity clips, will be intended not only to prevent high-profile mass shootings, but also to curb the more commonplace gun violence that claims many thousands more lives every year."  

The article makes a point to say, and I too have this same thought, how much can these proposals/laws really do to prevent these incidences?  The article states that from the recent connecticut shooting, gunman Adam Lanza did not buy the gun himself.  So, proposals from Obama about "background checks" would not have slowed Lanza as he didn't even purchase those weapons and would not have had to undergo such background checks.  "Gun control groups say that expanded background checks would help keep guns out of the hands of dangerous criminals and people with mental illness, and would go a long way toward increasing public safety and could help prevent mass shootings."

However, I am all for the proposals that Obama has listed.  Though we cannot perfectly prevent these incidences, I do agree with these revisions and better gun control policies.  What do you think?  Also, the article mentions the gun control policies in Australia where restrictions are much more serious

Trade Deficit

Import surge widens US trade gap 

This article from the Financial Times describes how the U.S. trade gap is the widest it has been in awhile. This gap was unexpected and various employed economists were disappointed to see the gap increase. 

Justice is Served!

After posting my most recent article about the JP Morgan Chase trading loss last year, their chief executive's pay was cut by 50%. This honestly has made my day because I was dumbfounded when I read an article yesterday telling me that he was making an obscene amount of money. The most ironic thing is that JP Morgan Chase profits are soaring.

Although Mr. Dimon’s compensation fell sharply, he dodged much of the criticism for the trading losses in two reports released on Wednesday.

Personally I think they went soft on Mr. Dimon. He is still keeping his base salary of 1.5 million this year. I guess doing something little is better than nothing, right?

Here is the link to the article. 

Politics and the debt ceiling

I just read a short piece ---see the link below:
4 Ways to Avert the Debt Ceiling (and the Most Likely Option Is the Scariest) - Atlantic Mobile

Remember that the debt ceiling problem is not the same problem as being unable to pay for a deficit.  The US could easily issue bonds to pay for the debt created by current US government obligations.  The debt ceiling however has been reached so no more bonds can be printed until the ceiling is raised or current obligations reduced.  One idea being floated is that of prioritization---the feds could prioritize their debts so that they pay only the most critical 60%, thus defaulting on the rest.

So current bargaining appears to lead to this:

Now it's a psychological game of chicken, with Obama and Republicans accelerating toward the other, each convinced they cannot swerve, and when they meet in the middle, they'll set off the mother of all global market crashes. 

Federal Banking Regulators Crack Down On JP Morgan Chase

In this article, federal banking regulators enforce action on JP Morgan Chase because of the multibillion   dollar trading loss that they incurred not too long ago. The bank regulators wants the bank to crack down on "bad" or "fake" money. Security levels should be heightened so that tainted money doesn't slip through the cracks. Communication between the bank and board of directors has been quite sketchy as well. More than 6 billion in trading loss has been documented thus far. This problem has even reached the government as Jamie Dimon, the chief executive, had to appear before congress to try and explain this whole fiasco.

What should happen to JP Morgan Chase? In the world we live in today, the biggest banks can take on the most risk without hardly any consequences. The government will most likely bail them out, just like they have before. (Too big to fail)?

Among the six largest banks in the United States, Mr. Dimon was the highest-paid chief executive, receiving $23.1 million in 2011. That year, his total pay package was made up of stock and option awards along with a $4.5 million cash bonus.

Can anyone tell me exactly what Mr. Dimon actually does to receive this outrageous paycheck let alone bonus!?

Obama Escalates Debt Fight

If I am remembering correctly, we either looked at this article during class or an article very similar to it.   The content of this article- debt, debt ceiling, debt limit- perfectly relates to what discussed today.  So, even if this article was already discussed in class, reading the entire thing was great and could be great for further blog discussion.  
"President Barack Obama, facing a battle over raising the U.S. borrowing limit, made clear Monday that he sees no alternative to Congress voting for an increase and said that not doing so would be "irresponsible" and "absurd."  The article poses a clear divide between what the Republicans want and what the Democrats and President Obama want.  The Republicans want to extract cuts in Federal spending, while Obama and his party want to raise the debt limit and "pay America's bills."  I agree with the pressure the Democrats are giving Obama that he should, as the article states, "use any 'lawful means' to avoid default."  However, I also understand and see positive with the Republican stance stated as, "Republicans have said an increase in the debt limit must be paired with spending cuts of equal size."  Based off this article and today's class discussions, what do you guys think?  What is best to do in this fight?

Can We All Get Along?

Though this article is short, it addresses something that I think we all wonder sometimes when politics get overly brutal: Can we all get along?  No Labels- an organization of Republicans, Democrats, and independents- does not see this happening.  What they want is, "No policy suggestions. No position papers. No Labels just want the members of Congress to grab a cup of coffee together."  No Labels held a conference today, "Meeting to Make America Work."  They know the about dozen politicians in the group do not have a loud voice in capitol hill, so their first priority is to go out to get more Senators and Representatives to join.

The reason I chose this article is because during the elections I thought some of the politicians seemed to get carried away or overly passionate.  I'm not saying that we should "all be friends" and have the same views.  But I don't think such hostility is good either.  Do you guys think this group has a voice that should be heard?  Obviously, the quote I stated above would not theoretically work.  Not everyone can be happy at the same time.  But is there some median or some type of policy suggestion that could maybe steer groups towards the same "aisle?"

German Auto Makers to Shake Up Luxury Market

"Germany's luxury car makers, fresh from record 2012 sales, plan to launch new, lower priced models that would draw younger, less affluent U.S. customers away from mass market brands such as Ford, Honda, and Toyota."

Recent news tied to this includes: 
1. Toyota just surpassed GM as the number one car seller in the world. They have managed to to this in the face of the tsunami in Japan cutting into sales numbers.
2. Detroit's own 'Lincoln Car Company' is currently overseeing a mass makeover initiative, to redeem themselves amongst the luxury brand companies mentioned above. If you've seen the new "Introducing the Lincoln Motor Company" commercials, this illustrates this effort perfectly. (A classy commercial, I must say)

So what does this move by German car makers say, about their response to the strategies of their competitors? What approach are they taking as as a retort? 

Something to think about

Not all of us in the class are business or economic majors, but all of us are at this moment students of the discipline. As was talked about in this class and in many other economic classes i've taken here, there are many competing views of what the facts about the study of economies actually are. There are many different opinions and it is very hard to nail down where some are right and some are wrong.

This article talks about this conflict and I think expresses a good opinion of the matter. Does reading this article help you to understand some of the things you've heard in classes here at K? 

Greece and Environmental Regulations

An interesting take on recessions and changes in regulation norms in Greece...

http://www.nytimes.com/2013/01/14/world/europe/seeking-revenue-greece-approves-new-mines-but-environmentalists-balk.html?pagewanted=all&_r=0

The trade-off between environmental damage and job creation is the burning question of environmental economic theory and in a place like Greece creating jobs in a recession is changing overall standards for the environment.

What are some case studies in the U.S. of Macro factors affecting policy like they are in Greece? I can think of quite a few.


Happy Monday

Difficult Decisions Lie Ahead

This article from the Wall Street Journal helps to describe and explain some of the difficult decisions that face the U.S. government regarding our economy. What decisions do you think should be made?

Obama Warns Republicans About Raising the National Debt Ceiling

As if our country wasn't in plenty of debt already. Obama called the plan "irresponsible" and "absurd" because it would set off another financial crisis. This bill would most certainly slow down our growth as a country.  The bigger problem in front of us is controlling gun violence. That should be first on the agenda according to Obama. Trying to make our country a better place.

“The full faith and credit of the United States of America is not a bargaining chip.”

“They will not collect a ransom in exchange for not crashing the American economy,” Mr. Obama said during his final news conference of his first term in office.

Should the Republicans continue to press this issue or should they just let it go? If raising the national debt ceiling is going to put the United States in another recession, then why even have this conversation right now? I have a feeling Obama and the Republicans in congress are going to be at each others throats all year.

http://www.nytimes.com/2013/01/15/us/politics/obama-to-press-house-gop-on-debt-limit.html?hp